As I move around various corporate offices or even in social gatherings, I find many discussions about AI, robotics, big data. And logically then the discussion quite often rolls into how our life will change due to availability of data, how each of our actions are turning into data, how the future consumer behavior thus can be predicted etc.

This is how predictive analytics (PA) finds its way into most discussions and we hear stories about its use in elections to predict voters behavior, customer behavior, payment risks etc.

Such a lot of discussions on its potential often reminds me of the famous Paul, the Octopus, who almost correctly predicted the various match results during 2014 World Cup Soccer. It was PA – was it not?

When I probe a bit, and ask – “so how do you use PA in your day-to-day business?” ….most of the times, the answer is – “ well….we are still evaluating, we just did a pilot which was quite successful, but yet to roll out across the organization.”

PA needs an integrated approach not a silo culture. It will take time to build trust to move from human-driven analytics to system-driven analytics.

Concerning - is it not? When we discuss so much about PA as the next big opportunity, how it can change the way we do business, how it can save so much time, effort and thus cost, then I wonder why is it that most organizations are not quickly moving beyond a mere proof-of-concept?

Before going further, let me quickly define what people understand as predictive analysis in simple terms. It is very close to using statistical modules and mathematical logic based on historical data and takes into account the current trends, market conditions, competitive activity and economic conditions to predict the future outcomes.

Let us take one simple example to illustrate the point. Let us look at sales forecasting where we actually look at past trends, market shares, economic forecasts, competitive activities, pricing trends, raw material pricing and new product launches to arrive at a forecast.

So logically what we do is that we use available information and make highly informed guesses by observing past trends, looking at current conditions to arrive at a future forecast.

Hence, if we have similar information, why can’t we capture relevant parameters that we use for regular sales forecasting and build in logic to use PA to arrive at the same forecast?

Why not use available technology and replace the sales forecasting process where thousands of man hours are spend when that can be done by few data scientists? In fact, to take the argument further, why can’t we abolish the traditional budgeting process and replace that with PA?

In reality, even today, after so much talk on PA, machine learning, and AI, most organizations are yet to embrace technology in this area. They still use the traditional budgeting and forecasting process involving almost the whole organization for months, spending millions of dollars in the process.

Surprising, but true. In my view, there are few distinct reasons for such behavior:

Lack of understanding by senior leaders: It is hard to acknowledge but true that many senior executives lack in depth understanding though they may be aware of the concepts of big data, machine learning or AI. As a result, they are unable to appreciate the possibilities that technology can open up. Till senior leaders gain knowledge and come on board, opportunities like PA will remain on paper and their true potential won’t be realised.

Lack of data and process-driven culture: It is easier said than done. A culture needs to be top-down and should be driven across the company. It takes years to build such a data and process-driven culture. A strong sponsorship from the top is essential for such a change in culture. This can only happen when the senior leaders sense and realise the missed opportunities.

Thus, many of us still do not believe that concepts like machine learning, artificial intelligence can replace human effort. We may not talk about it in the open, but we just do not believe it,

Lack of trust: Most of the executives are not fully satisfied with the analytics they receive for running the business. And hence many of the decisions are not data-driven but are based on their experience and knowledge.

And thus they are not quite sure of the analytical capabilities in their organizations. No wonder, considering the adoption of PA in any real way is too far fetched. We need to understand that things have changed over time and every day technology is progressing faster than yesterday. What we should realise is that trusting too much on our past experience is not helping us. We must give new opportunities a fair try.

Silo approach: Many organizations are still run in departmental silos. They are, yet to have a culture that spans the organization. Thus, cross functional holistic insights are very often missing, or if indulged in, may be insufficient for an effective business decision.

Thus, analytics are silo based and not integrated. PA needs an integrated approach not a silo culture. It will take time to build trust to move from human-driven analytics to system-driven analytics.

We must recognise that in order to take the step towards embracing concepts like PA, we as leaders need to learn, unlearn and relearn. Or else, we will remain in silos doing more proof-of-concept and not the real PA.

In the process, are we not missing some big opportunities?

DISCLAIMER: The views expressed are solely of the author and ETCFO.com does not necessarily subscribe to it. ETCFO.com shall not be responsible for any damage caused to any person/organisation directly or indirectly.

Partha Basu is the Global Head of Finance Operations of a Fortune 500 Company and has authored four books on management and corporate insights including his bestseller, Mid-Career Crisis published by Harper Collins in 2015. Partha is based out of Amsterdam and the opinions and thoughts expressed here are purely personal in nature and have no relation to his past or present employer.

Partha Basu is the Global Head of Finance Operations of a Fortune 500 Company and has authored four books on management and corporate insights including his bestseller, Mid-Career Show more.. Crisis published by Harper Collins in 2015. Partha is based out of Amsterdam and the opinions and thoughts expressed here are purely personal in nature and have no relation to his past or present employer.